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Lawyers Who Targeted Porn Users With Allegedly Extortionate Lawsuits Now Face Criminal Charges

Attorneys generally get a bad reputation from those who think they’re motivated too much by money and not enough by serving their clients, but according to a recent indictment against Paul Hansmeier and John Steele, these two attorneys were allegedly using the courts to extort money from their opponents, rather than their clients.

The two attorneys attended the University of Minnesota Law School together, and while Hansmeier still lives in Minnesota, Steele is licensed in Illinois. According to the indictment, the two attorneys allegedly created sham companies in 2010, which they used to acquire the rights to certain pornographic films, some of which they made themselves. Then Steele and Hansmeier allegedly uploaded their copyrighted porn to file-sharing websites, knowing people would download their porn. Steele and Hansmeier would then file a copyright lawsuit against the individual on behalf of their “clients” – which were, in fact, the companies they themselves owned.

Then Steele and Hansmeier would allegedly petition the courts to require internet service providers to provide the identities of the people who had downloaded the porn. Once they had acquired those identities, the attorneys allegedly offered to settle the lawsuit for about $4,000. The alternative was to face public exposure and fines that could potentially get as high as $150,000. Many of their victims were either too humiliated and/or financially incapable of dealing with the lawsuit, so they often accepted the settlement offer.

When courts put a limit on the number of defendants that could be included in one such copyright lawsuit, Steele and Hansmeier allegedly switched to filing false lawsuits claiming the data of some of their “clients” had been compromised. They then asked the courts to require internet service providers to submit information, which would then allegedly give the attorneys a chance to identify potential new extortion victims.

The two attorneys allegedly tried to further distance themselves from the fraud they were allegedly committing by forming Prenda Law, a new law firm over which Steele and Hansmeier allegedly maintained de facto control. At the same time, the two attorneys continued to allegedly hide from the courts any involvement with the companies that had apparently hired them.

According to the indictment, Steele and Hansmeier allegedly went home with approximately $6 million as a result of the allegedly false and misleading lawsuits they filed against unsuspecting porn users or purported porn users all over the country. They have been charged with conspiring to commit mail and wire fraud as well as conspiring to commit perjury and launder money.

Once people started to get suspicious of the copyright lawsuits, Hansmeier allegedly took a different approach by suing small businesses for allegedly failing to comply with the accessibility rules included in the Americans with Disabilities Act. Since few small businesses have the resources to defend against such a lawsuit, most chose to settle outside of court. He filed more than 100 such lawsuits in Minnesota before the state legislature made adjustments to the law to prevent allegedly predatory lawsuits like the ones he was filing.

U.S. Attorney Andrew Luger, who announced the charges at a recent news conference, said the indictment against Steele and Hansmeier will likely require special attention because it raises questions about the integrity of the entire profession.

Super Lawyers named Illinois business trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso-Lubin’s Illinois business trial lawyers have over a quarter of century of experience in litigating complex class action, copyright, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes.  Our Oak Lawn and Berwyn business dispute lawyers handle emergency business law suits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0000 or our toll free number (877) 990-4990.  You can also contact us online here.